Canadians work hard to ditch their mortgages early

 Lines of credit, personal loans also levelling off

While mortgage repayments can be spread out over 30 years, the CMHC reports the average amortization period for mortgages insured by the national housing agency is under 25 years, and the loan-to-value ratio of those homes was 80 per cent or less. As of Sept. 30, the outstanding loan amount per household for all homeowner loans was $159,740, slightly above the figure for the previous year.

"CMHC analysis shows that a substantial percentage of CMHC-insured high ratio borrowers are ahead of their scheduled amortization," the agency said. "Accelerated payments shorten the overall amortization period, reduce interest costs, increase equity in the home at a faster rate and lower risk over time."
The agency's mortgage arrears rate is 0.42 per cent, in line with industry trends.
Rules brought in by the federal government in March, in response to historic levels of household debt, which reduced amortization periods on certain mortgages, and limited the amount that can be borrowed when a house is refinanced, cut refinancing activity by 31 per cent from last year, the CMHC said. The agency's homeowner purchase mortgage insurance program showed a year-overyear decrease of 12 per cent.
"The level of household debt remains a concern, but there are encouraging signals," it says. "There has been a significant deceleration in the growth of mortgage credit since March, particularly in recent months, impacting the growth rate of total household credit. Growth in personal loans, lines of credit and credit cards has levelled off in recent months."
The agency notes general economic conditions have been favourable in 2011, with stable mortgage rates, a healthy housing market and a declining unemployment rate.
"Overall arrears levels and arrears rates have been improving and (mortgage insurance) claims volumes have been lower than expected," it said. "Given current economic forecasts, it is expected that trends will improve moderately going forward, although both downside and upside risks remain."
While housing sales have slowed since January, the CMHC expects sales for the year to fall within a range of 423,600 to 470,100 units, and next year's sales to be somewhere between 406,100 and 509,000 units. Prices should "modestly grow as market conditions are expected to remain in the balanced market range," it said.

© Copyright (c) The Montreal Gazette

Read more: http://www.montrealgazette.com/business/Canadians+work+hard+ditch+their+mortgages+early+CMHC/5786956/story.html#ixzz1fCSsJukp